The UK’s competition watchdog has provisionally blocked the merger of wealth technology providers FNZ and GBST citing substantial lessening of competition which could lead to higher costs and lower quality services for customers.
FNZ agreed to acquire GBST in July last year. The deal was completed last November.
The combined group would be the largest UK supplier in the area, with a market share of around 50%.
However, after a probe, the Competition and Markets Authority (CMA) found that the merged entity would face limited competition in a market that is concentrated with a few other significant suppliers.
The only competitor that the combined business is likely to face is Bravura, noted the watchdog.
According to the regulator regarding the merger, FNZ and GBST are two of the leading UK retail investment platform solutions suppliers and have consistently competed against each other in recent tenders.
Customers consider them as close alternatives even though the firms have different business models.
GBST is a software-only provider while FNZ offers integrated software and servicing solution.
CMA is accepting views on the findings by 25 August and possible remedies by 18 August.
It has also set out options for addressing the matter, which include divestiture of all or a portion of GBST by FNZ.
CMA inquiry group chair Martin Coleman said: “That’s why we’re concerned that their merger could lead to investment platforms, and therefore indirectly millions of UK consumers who hold pensions or other investments, facing higher fees and lower quality services.”
The regulator based its findings on tender data and the internal documents of the firms, as well as discussions with customers, competitors, and other stakeholders.